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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
appropriations; graduate medical education program
Purpose
Appropriates $10,000,000 from the state General Fund (state GF) and $18,768,700 in Medicaid Expenditure Authority in FY 2027 to the Arizona Health Care Cost Containment System (AHCCCS) for the direct and indirect costs of graduate medical education (GME) and to fund the development of a new residency program.
Background
GME means a program, including an approved fellowship, that prepares a physician for the independent practice of medicine by providing didactic and clinical education in a medical discipline to a medical student who has completed a recognized undergraduate medical education program (A.R.S. § 36-2901).
The AHCCCS GME Program reimburses hospitals with GME programs for the additional costs of treating members with graduate medical students. In addition to state GF monies, local, county and tribal governments, as well as public universities, may provide state match to a recipient of the entity's choice. Monies allocated by the state GF support GME payments to hospitals located in health professional shortage areas. GME funds are distributed by AHCCCS to hospitals that provide training and education for medical school graduates. This training includes internships, residencies and fellowships. GME funds are either designated to cover direct medical education expenses or indirect medical education expenses (AHCCCS; JLBC).
S.B. 1169 appropriates $10,000,000 from the state GF in FY 2027 to AHCCCS.
Provisions
1. Appropriates $10,000,000 from the state GF and $18,768,700 in Medicaid Expenditure Authority in FY 2027 to AHCCCS for GME programs to address the Arizona physician shortage.
2. Allows appropriated monies to be used for direct and indirect costs of GME and to fund the development of a new residency program.
3. Specifies that the appropriation may supplement, but not supplant, voluntary payments by political subdivisions to hospitals that operate a GME program.
4. Exempts the appropriations from lapsing.
5. Becomes effective on the general effective date.
Prepared by Senate Research
January 22, 2026
MM/SDR/hk